This proceeding is more accurately named: “Preempting state laws to allow shutting off of copper wire services so that the companies can get rid of any State Telecom Utility obligations, (and the unions) and only provide inferior wireless services (in place of a fiber optic wire to the home)— so Telecom companies can make more money”.

At the same time, the Telecom companies and the FCC will make outrageous claims about the future of “5G”, a wireless service that does not exist today and may never work as advertised. Ironically, “4G+1G HYPE” requires a fiber optic wire every block or two; these fiber optic wires could be extended to every home or business, but the Telecom companies don’t want to do that: they make more money for data-capped, unregulated Wireless services.

Once the FCC gets rid of Net Neutrality and privacy restrictions, the plan is to beef up the ad-tech to track you on all devices and sell the information. Keeping with their ‘say anything’ playbook, by using the magical terms ‘broadband’, ‘Internet’, ‘Digital Divide’, ‘revolution’ and ‘new tech’ as political carrots, the Telecom companies continue to get even more subsidies and help from the government.

This is what the FCC and the Telecom companies have planned. We are advocating for a very different future. We are asking every state, every city and every citizen to demand that the FCC stop the current series of proceedings to ‘shut off the copper’ and preempt state laws and — instead — request that the FCC start audits and investigations into the Agency’s own cost accounting rules and the massive financial cross-subsidies that its own rules have created.

At the same time, we are asking every state, every city and every citizen to request that the State Utility commissions, Attorneys General and Advocate offices start state-based audits and investigations, as has been going on at the NY Public Service Commission (NYPSC), which has been examining Verizon-NY’s quality of service issues and financial cross-subsidies: illegally transferring funds from Verizon-NY (the State Telecommunications Utility) to Verizon Wireless and other unregulated Verizon subsidiaries.

In fact, Verizon has recently started to discuss a settlement, which we will address in an upcoming post. We summarized our analysis in a new report: “Verizon New York 2016 Annual Report: Follow the Money: Financial Analysis and Implications” — which we filed in our comments at the FCC.

History shows that this tired strategy of reducing Telecom regulation has not worked to increase Wireline competition and none of the FCC, the State Utility Commissions, AT&T, Verizon and CenturyLink — or their co-opted groups, think tanks and experts — have ever publicly discussed this fact. We placed the entire book “The Book of Broken Promises” into the public record at the FCC to prove that the FCC et al. is clueless or in denial about

the history of Broadband and the Internet

the hundreds of billions of dollars in investment incentives that were given, over and over, to what is now AT&T, Verizon and CenturyLink to upgrade the copper wires to fiber optics.

The FCC should be asking:

Why is most of America’s telecommunications infrastructure still based on the aging copper wires and not fiber optic wires?

Where did all the money go?

The IRREGULATORS is convinced that the FCC needs to be taken to court over the decision they will make in this proceeding and we hope that commenters, organizations, cities and state organizations, and citizens will join us.

In fact, based on history, we file this knowing that this FCC will not take any action based on our filings, will ignore basic facts and documentation that refute their plans and has been doing this long before this proceeding. The FCC refuses to take seriously any of the data and facts we’ve presented in our previous filings, including the recent report submitted that used the Verizon New York 2016 Annual Report as the foundation of our analysis.

In short, the FCC has been working for the industry, not the public interest.The FCC’s goal is to remove basic consumer protections, free AT&T, Verizon et al. from any obligations of offering service, and erase the basic cost accounting rules instead of auditing the impacts of their rules.

Comment 1: is a short overview as well as a bibliography of our research, which is directly tied to this proceeding It also gives a brief discussion of issues that have been overlooked or are missing and need to be part of the next steps the State should be implementing.

Comment 2: is a more detailed view of the current proceeding and Verizon settlement, as published in tbe Huffington Post: Verizon NY in Multi-Billion Dollar Settlement Tangle, Underway in NY State.

Verizon-NY is the state-based Telecommunications Utility serving the majority of New York State; it is a wholly owned subsidiary of the holding company, Verizon Communications. Verizon-NY is required to file an annual report with the NY State Public Service Commission (NYPSC) that suppli es data that were originally provided in state-based reports filed with the FCC, known as ARMIS. The FCC, for some reason, stopped requiring this information by-state in 2007.

Verizon Wireless, Verizon Online, Verizon Business, etc., are all separate subsidiaries of Verizon Communications and are “subsidiaries” of Verizon-NY. While they maintain separate financial accounting, there are clear cross-subsidies of these other lines of business from the state utility, Verizon-NY.

This report is part of and must be seen in light of what is happening throughout the US and at the FCC. The only thing unique about Verizon NY is that it is required to do an annual report by the NYPSC. We do not know of any other state that has publicly available financial information, though some states keep the info and require a FOIA request to obtain it.

Unfortunately, while the NYPSC collects the data, it has never acted on what we found and no other state we know of has audited the financial books. The FCC has never audited these financial books, even though they are making rules that directly impact customers in urban ad rural areas across the US.

On May 24th, 2017, the IRREGULATORS filed comments with the FCC and the Federal State Joint Board on Jurisdictional Separations.

IRREGULATORS:

We recognize that the Commission has chosen to deregulate the so-called Price Cap Carriers such that to the limited extent that they are subject to rate regulation, it is via a price cap mechanism, not the traditional Uniform System of Accounts. Hence only the Rate of Return Carriers are directly subject to the separations mechanism for the computation of their interstate rates. However, even in the case of the Price Cap Carriers, Separations is a joint federal-state matter, and the freeze imposed by the Commission directly impacted state rates and, even more importantly, policies. Fictitious accounting leads to bad decision-making. Hence the costs of more accurate separations are not an undue burden. Rate of Return Carriers already are required to provide detailed regulatory accounting in order to determine their appropriate rate and subsidization levels. Price Cap Carriers, especially the Bells (including their successors-in-interest) are large companies with ample accounting resources. Thus, the issues we raise are not moot, even when dealing with the largest carriers.

The Federal State Joint Board has asked:

Re: Federal State Joint Board on Jurisdictional Separations Seeks to Refresh Record on Issues Related to Jurisdictional Separations, FCC 17J-1

Re: Federal State Joint Board on Separations Seeks Comment on Referral for Recommendations of Rule Changes to Part 36 as a Result of Commission Revisions to Part 32 Accounting Rules, FCC 17J-2

So my question is: how were ISP’s able to receive so much money with zero accountability? Did the government really set up a handshake agreement over $200 billion?

Bruce Kushnik’s Response:

Maybe you should go to the source: I’ve written three books about this starting in 1998 — and all of these appear to be related to the same threads — over two decades.

Here’s a free copy of the latest book, “The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net”, which we put up a few
weeks ago because few, if anyone actually bothered to read how the calculations were done. They were based on the Telecom companies’ annual reports, state filings, etc.– and the data is based on 20 years of documentation.

I’ve been tracking the Telecom deployments of fiber optics since 1991 when they were announced as something called the Information Superhighway. The plan was to have America be the first fiber optic country — and each phone company went to their state commissions and legislatures and got tax breaks and rate increases to fund these ‘Utility network’ upgrades that were supposed to replace the existing copper wires with fiber optics — starting in 1992. It was all a con.

As a former senior telecom analyst (the Telecoms my clients) I realized that they had submitted fraudulent cost models, and fabricated the deployment plans. The first book, 1998, laid out some of the history “The Unauthorized Biography of the Baby Bells” with foreword by Dr. Bob Metcalfe (co-inventor of Ethernet networking). I then released “$200 Billion Broadband Scandal” in 2005, which gave the details as by then more than 1/2 of America should have been completed — but wasn’t. The mergers to make the Telecom companies larger were also supposed to bring broadband– but it didn’t. I updated the book in 2015 “The Book of Broken Promises $400 Billion broadband Scandal and Free the Net”, but realized that there were other scams along side this — like manipulating the accounting.

We paid about 9 times for upgrades to fiber for home or schools and we got nothing to show for it — about $4000-7000 per household (though it varies by state and telco). By 2017 it’s over 1/2 trillion.

Finally, I note. These are not “ISPs”; they are State Telecommunications Utility companies that were able to take over the other businesses (like ISPs) thanks to the FCC under Mike Powell, now the head of the cable association.

They got away with it because they could create a fake history that reporters and politicians kept repeating. No state has ever done a full audit of the monies collected in the name of broadband; no state ever went back and reduced rates or held the companies accountable. And no company ever ‘outed’ the other companies– i.e., Verizon NJ never said that AT&T California didn’t do the upgrades.

That’s because they are all guilty of the same scheme, more or less. I do note that Verizon at least rolled out some fiber. AT&T pulled a bait and switch and deployed U-Verse over the aging copper wires (with a ‘fiber node’ within a mile).

It’s time to take this to court. Period. We should go after the financial manipulations (cross-subsidies) where instead of doing the upgrades to fiber, they took the money and spent it everywhere else, like buying AOL or Time Warner (or overseas investments), etc. We should hold them accountable before this new FCC erases all of the laws and obligations.

The following is an Excerpt from $200 Billion Dollar Broadband Scandal about the failed fiber optic history of California. What is now the post-merger AT&T (formerly Pacific Bell) had promised to deploy a fiber optic network that would reach 5.5 million homes by the year 2000 and spend $16 billion dollars.

“A regulated company will always renege on promises to provide public benefits tomorrow in exchange for regulatory and financial benefits today.”

America’s households and businesses have been overcharged at least nine times for broadband/fiber optic services, including the wiring of schools, libraries, and hospitals— about $4000-$7000 per household, and the total is way over ½ trillion dollars by 2016. You can thank just a few companies: AT&T, Verizon and Centurylink, who control the state-based utilities, along with the cable companies, Comcast and now-Spectrum et al. And this is the low number.

The 3rd book in a trilogy that started in 1998, “The Book of Broken Promises” by Bruce Kushnick, proves that few have a clue about the factual history of broadband, much less fiber optic deployments in America that customers paid for, especially the FCC.

April 2017 was Infrastructure Month at the FCC; shame you weren’t told the truth. FCC Chairman Ajit Pai, a former Verizon attorney, has been making sure you hear the fake history of broadband and the Internet, which is being used to create exceedingly harmful public policies, and this needs to be stopped, now.

And regardless of what you heard, Verizon, AT&T and CenturyLink control the state telecommunications utilities, such as Verizon NY or AT&T-California, a fact that has been erased. And the copper wires, as well as most of the fiber optic wires are part of these state utilities, including those used for FiOS or the wires to the cell sites, or all of the other ‘business data services’ (BDS). And they have been funded mainly by local phone customers—and are classified as something called “Title II”.

(Yes, AT&T and Verizon are also wireless companies, and ISPs, and cable companies, and broadband companies, and more recently ad-tech and entertainment companies. However, almost all of it uses the state utility wires, especially in their own territories.)

Since the beginning of 2017, the FCC has been a path of destruction with the overarching theme to erase all laws, regulations and consumer protections and to let a few very large monopolies/duopolies (or oligopoly)—Verizon, AT&T, Centurylink, and the cable companies—do what they want at your expense.

And this FCC can follow this path because there are only three current commissioners (out of a full complement of five), where the FCC Chairman, Ajit Pai, a former Verizon attorney, controls the agenda with the second Republican Commissioner, Michael O’Rielly. This means that the only Democrat, Mignon Clyburn, (who has always taken a pro-consumer position), will lose every vote, but rather it means that the American Public loses as well.

Much of the FCC’s destructive path is well known to most:

Block Privacy Rules: The FCC (with Congress) has blocked the implementation of the previous FCC administration’s new privacy rules from going forward. Blocking this new rule allows the phone and cable companies to sell the customer’s information to advertisers and give their own affiliate companies the ability to spy and track customers’ purchases, friends, contacts, etc., on multiple devices.

Erasing the Net Neutrality rules is next and there will be a flurry of activities to stop the new FCC’s plans to neuter customer protections.

But there are other areas that have gotten little or no attention and they are at the core of your communications.

Erase Basic Accounting Rules: The very first official FCC meeting was used to erase some of the basic accounting rules,

Groups working hard to block or delay the proposed FCC deregulation of broadband business data services (BDS) teamed up for a conference call with reporters Tuesday as the clock wound down on the planned April 20 vote, saying the proposal was dangerous, anti-consumer, and susceptible to court challenge for being arbitrary and contrary to the FCC’s charter on guaranteeing reasonable rates.

On that call were representatives of Public Knowledge, Consumer Federation of America, INCOMPAS, and the Open Technology Institute, who want the FCC to delay the vote so it can supply some of the economic expertise the chairman has been touting to the data—or failing that to at least provide a three-year transition period so some of the “nearby” competition can come closer.

The groups said that the proposal by FCC chairman Ajit Pai was arbitrary and capricious because it was based on a massive data collection on which his predecessor, Tom Wheeler, based an entirely different conclusion in a Notice of Proposed Rulemaking from which the BDS order being voted this week stems. Wheeler’s proposal concluded that the BDS marketplace was not particularly competitive, a conclusion with which the groups heartily agree. Pai’s proposal assumes it is generally competitive and getting more so and that the presence of nearby competition and two competitors in a market demonstrated that competiveness.

Phillip Berenbroick, senior policy counsel at Public Knowledge, called the Pai proposal doubling down on consolidation and debunked theories that competition in the BDS market is “just around the corner.” Chip Pickering of INCOMPAS suggested that the idea that nearby competition was sufficient was the equivalent of saying “one is enough,” which he called a “dangerous, dangerous” test for competitive markets and one that would hurt small businesses, consumers and investment.

Michael Calabrese of the Open Technology Institute also warned that the proposal would undermine wireless broadband because of how dependent wireless is on BDS backhaul services—wireless traffic travels from cell sites over wired (fiber) broadband nets. He said that as much as 30% of cell service operating expenses comes from that BDS backhaul, which they are required to buy at uncompetitive prices from incumbents that are also dominant mobile carriers. He said that is a high-priced fiber diet that the Pai proposal will make even higher.

Pickering, a former Republican congressman from Mississippi, said the Pai proposal was running against the Trump deregulatory tide with respect to education and healthcare and other issues, where the goal was competition and lower prices and that for schools, libraries and small businesses, it would amount to a no bid contract for critical connectivity.

Another day, another anti-consumer corporate giveaway.

President Trump’s recently-installed Federal Communications Commission chief, Republican Ajit Pai, has made clear that he wants to roll back US rules protecting net neutrality, the principle that all internet content should be equally accessible to consumers.

But the forthcoming Republican assault on net neutrality is just one component of an escalating effort by Trump’s FCC to deregulate the broadband industry in ways that benefit corporate giants like AT&T and Verizon, and hurt consumers, according to public interest advocates.

For example, the FCC voted today to approve a controversial plan to deregulate the $45 billion market for business-to-business broadband, also known as Business Data Services (BDS), by eliminating price caps that make internet access more affordable for thousands of small businesses, schools, libraries and hospitals. The price caps, which have been in place for years, are designed to protect small businesses and other community institutions from predatory behavior by monopoly broadband providers like AT&T and Verizon.